High taxes hampering growth of luxury car segment in India: Audi

NEW DELHI: A high taxation regime is restricting growth of the luxury car segment in India and the government should look at lowering the levies in order to help the sector grow, according to German automaker Audi.

Luxury car volumes account for less than 2 per cent of the overall passenger vehicle sales annually and the sector has been more or less at the same level for the past decade.

“We haven’t been able to utilise our capacities here to the fullest primarily because the luxury segment hasn’t grown in the country.”

“While the volume segments have been growing all these years, the luxury segment went up to 40,000 units a year and stayed in that range and this year we can end up even lower than that,” Audi India head Balbir Singh Dhillon said in an interaction.

Hefty taxes have ensured that the segment has remained in the slow lane over the years. “The luxury segment has remained less than 2 per cent of the overall passenger vehicle vertical. I think the major request we have for the government is to reduce the duties. Apart from 28 per cent GST, which in any case is high, we also have cess on top of it,” Dhillon stated.

Besides, there is high registration cost in some of the states and the rising fuel price also adds to the total cost of ownership, he added.

“So if this cess part is taken off and also if the registration costs are kept reasonable and same across the country, it will help the segment,” he noted.

Luxury vehicles currently attract the top GST slab of 28 per cent with an additional cess of 20 per cent on sedans and 22 per cent on SUVs, taking the total tax incidence to up to 50 per cent.

“Our request is to standardise the taxation structure because our customers are very well travelled and they know that the same models which we are selling here at higher cost are much more affordable in other countries. We are one of the countries where the taxation is the highest,” Dhillon noted.